Republic of Turkey (security code: -)

Transcription

1 Japan Credit Rating Agency, Ltd. (JCR) announces the following credit rating. 17-I-0052 December 1, 2017 Republic of Turkey (security code: -) <Assignment> Bonds: BBB- Rationale The ratings are supported by the country s largest economic base in the Middle East, financial soundness of the banking sector and restrained level of government debt. Meanwhile, the ratings are constrained by macroeconomic imbalances as seen in its low saving rate and chronic current account deficit, large external financing needs and dependence on the international financial markets, and political and social conditions which needs further improvements. The political base of the government has been steadily strengthening since the constitutional amendment aimed to introduce executive presidency was passed by majority in a referendum in April Since then, domestic political conditions and economic activities have been recovering. Transition to the executive presidency is planned to be implemented following presidential and general elections scheduled for November It is expected that there will be no large-scale national elections until that time. JCR considers that domestic political conditions will keep its status quo in general and economy will continue to grow moderately during that period. It will closely monitor whether the government will accelerate structural reforms to correct the macroeconomic imbalances on the basis of a strengthening power base. Toshihiko Naito, Shinichi Endo Rating Issuer: Republic of Turkey <Assignment> Issue Series E Series 1 (2017) Series E Series 2 (2017) Series E Series 3 (2017) Series E Series 4 (2017) Series E Series 5 (2017) Series E Series 6 (2017) Series E Series 7 (2017) Series E Series 8 (2017) Series E Series 9 (2017) Series E Series 10 (2017) Issue Amount (bn) Issue Date Due Date Coupon Rating JPY 37 Dec. 7, 2017 Dec. 7, % BBB- JPY 2 Dec. 7, 2017 Dec. 7, % BBB- JPY 1 Dec. 7, 2017 Dec. 7, % BBB- JPY 0.7 Dec. 7, 2017 Dec. 7, % BBB- JPY 3 Dec. 7, 2017 Dec. 7, % BBB- JPY 2.4 Dec. 7, 2017 Dec. 7, % BBB- JPY 3.6 Dec. 7, 2017 Dec. 7, % BBB- JPY 3 Dec. 7, 2017 Dec. 7, % BBB- JPY 3.6 Dec. 7, 2017 Dec. 7, % BBB- JPY 3.7 Dec. 7, 2017 Dec. 7, % BBB- <Reference> Foreign Currency Long-term Issuer Rating: BBB- Outlook: Stable 1 / 2

2 Rating Assignment Date: December 1, 2017 The criteria used for identifying matters which serve as assumptions for the assessment of the credit status, and the criteria used for setting of grades indicating the results of the assessments of the credit status are published as "Types of Credit Ratings and Definitions of Rating Symbols" (January 6, 2014) in Information about JCR Ratings on JCR's website ( Outline of methodology for determination of the credit rating is shown as "Sovereign and Public Sector Entities" (November 7, 2014) in Information about JCR Ratings on JCR's website ( Japan Credit Rating Agency, Ltd. Jiji Press Building, Ginza, Chuo-ku, Tokyo , Japan Tel , Fax Information herein has been obtained by JCR from the issuers and other sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error as well as other factors, JCR makes no representation or warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose, with respect to any such information, and is not responsible for any errors or omissions, or for results obtained from the use of such information. Under no circumstances will JCR be liable for any special, indirect, incidental or consequential damages of any kind caused by the use of any such information, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether such damages are foreseeable or unforeseeable. JCR's ratings and credit assessments are statements of JCR's current and comprehensive opinion regarding redemption possibility, etc. of financial obligations assumed by the issuers or financial products, and not statements of opinion regarding any risk other than credit risk, such as market liquidity risk or price fluctuation risk. JCR's ratings and credit assessments are statements of opinion, and not statements of fact as to credit risk decisions or recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper. The ratings and credit assessments may be changed, suspended or withdrawn as a result of changes in or unavailability of information as well as other factors. JCR retains all rights pertaining to this document, including JCR's rating data. Any reproduction, adaptation, alteration, etc. of this document, including such rating data, is prohibited, whether or not wholly or partly, without prior consent of JCR. JCR is registered as a "Nationally Recognized Statistical Rating Organization" with the U.S. Securities and Exchange Commission with respect to the following four classes. (1) Financial institutions, brokers and dealers, (2) Insurance Companies, (3) Corporate Issuers, (4) Issuers of government securities, municipal securities and foreign government securities. JCR publishes its press releases regarding the rating actions both in Japanese and in English on the same day. In case that it takes time to translate rating rationale, JCR may publicize the summary version, which will be replaced by the full translated version within three business days. (Regarding Structured Finance products, JCR only publicize the summary version in English.) Copyright Japan Credit Rating Agency, Ltd. All rights reserved. 2 / 2

3 Information Disclosure Form Japan Credit Rating Agency, Ltd. Disclosure Required by Paragraph (a)(1)(ii) of Rule 17g-7 Issuer: Republic of Turkey Rating Publication Date: December 1, The Symbol, Number, or Score in the Rating Scale used to Denote Credit Rating Categories and Notches and, the Identity of the Obligor or the Identity and a Description of the Security or Money Market Instrument as Required by Paragraph (a)(1)(ii)(a) of Rule 17g-7 Please see the news release. 2 The version of the procedure or methodology used to determine the credit rating; as Required by Paragraph (a)(1)(ii)(b) of Rule 17g-7 Please see the news release. 3 The Main Assumptions and Principles used in Constructing the Procedures and Methodologies used to Determine the Credit Rating as Required by Paragraph (a)(1)(ii)(c) of Rule 17g-7 The credit rating methodology assumes, in principle, to be applied to assess the likelihood of a given debt payment in light of its issuer s condition and business environment, etc. in the relevant future. There is certain limitation, however, in the time horizon that the rating foresees. The credit rating methodology assumes, in principle, that the factors posted in the below are particularly important for such likelihood to be determined, and that the rating determination is made by evaluating each of them not only quantitatively but also employing qualitative analyses. A) Economic Base The likelihood of a given debt payment is highly conditional to the issuing government s ability to maintain/expand the economic base into the future with maintaining soundness of financial systems. B) Fiscal Base The likelihood of a given debt payment is highly correlated to fiscal balance, public debt and other factors of the issuing government s fiscal condition. C) External Positions The likelihood of a given debt payment is highly correlated to the liquidity positions which change along with the international balance of payments and the international investment position. D) Social and Political Bases and Economic Policy The likelihood of a given debt payment is highly conditional to the social and political stability, effectiveness of economic and monetary policies as well as international economics. 1 / 5

4 E) Related Parties Stance of Support/ Assistance for the Government The likelihood of a given debt payment is affected by the stance of the credit enhancement provider and other related parties with regard to their stance of support/ assistance for the issuing government. F) Order of Seniority in Debt Payment The likelihood of debt payment can be different between given debts of the same issuer. The likelihood of debt payment for an individual debt is dependent on the issuing government s will, and/ or its rank relative to other debts of the same government in the order of seniority in principal/ interest payment which is determined by design as financial product or by international practice, etc. 4 The Potential Limitations of the Credit Rating as Required by Paragraph (a)(1)(ii)(d) of Rule 17g-7 The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood of given debt payment and hence not necessarily a perfect representation of such likelihood. The credit rating is not intended to estimate the probability of default or the loss on given default, either. The objective of the credit rating herewith presented does not include any concerns other than the likelihood of debt payment, such as risks of price changes, market liquidity, etc. The credit rating herewith presented is necessary to be reviewed along with possible changes of the issuer of rated objects in its business performance and/ or circumstances which include regulatory environment, and hence subject to possible alteration. 5 Information on the Uncertainty of the Credit Rating as Required by Paragraph (a)(1)(ii)(e) of Rule 17g-7 The information used for the determination of credit rating as herewith presented is obtained by JCR from the issuer of rated objects and other sources that JCR trusts in terms of accuracy and reliability but possibly contains errors due to human, non-human or other causes. Consequently, the credit rating determined on the grounds of such information does not constitute, explicitly or implicitly, any representation or warrant of JCR on the information itself or any consequences of its use in terms of accuracy, relevance, timeliness, wholeness, market value, or usefulness for any specific purposes. 6 Use of Due Diligence Services of a Third Party in Taking the Rating Action as Required by Paragraph (a)(1)(ii)(f) of Rule 17g-7 There is no use of any third-party due diligence service in the determination of the credit rating herewith presented. 7 Use of Servicer or Remittance Reports to Conduct Surveillance of the Credit Rating Required by Paragraph (a)(1)(ii)(g) of Rule 17g-7 There is no use of any servicer or remittance report to conduct surveillance of the credit rating herewith presented. 8 The Types of Data Relied Upon for the Purpose of Determining the Credit Rating as Required by Paragraph (a)(1)(ii)(h) of Rule17g-7 2 / 5

5 The information posted in the below, which includes data, is used for the determination of the credit rating herewith presented. A) Informational and explanatory materials presented by the rating stakeholders with regard to the economy and fiscal management policy, etc. of the issuing government B) Statistics and reports published by an independent organization with regard to the economy and fiscal status, etc. of the issuing government C) Documentation of the rated financial product presented by the issuing government 9 Overall assessment of the Quality of Information Available and Considered in Determining the Credit Rating as Required by Paragraph (a)(1)(ii)(l) of Rule 17g-7 JCR holds its basic policies for securing the quality of information as a base of due diligence for the determination of credit ratings. The information used as a base for the determination of credit rating herewith presented satisfies such policies, which include the publication by the issuer or some independent media or, otherwise, JCR analyst s scrutiny, etc. JCR sees no particular weakness in the quality of information used for the determination of the credit rating herewith presented as compared to the information used in other cases of the credit rating for comparable issuers or ratable objects. 10 Information Relating to Conflicts of Interest as Required by Paragraph (a)(1)(ii)(j) of Rule 17g-7 JCR receives payment of compensation for the determination of the credit rating herewith presented from either one of those parties who are issuer, underwriter, depositor or sponsor. JCR did not receive in the last fiscal year in the past payment of compensation from the same party for any kind of JCR s service other than the determination of credit rating, such as one in the ancillary business. 11 Explanation or Measure of the Potential Volatility of the Credit Rating as Required by Paragraph (a)(1)(ii)(k) of Rule 17g-7 A) Economic Base The credit rating is subject to alteration if there is an improvement or deterioration of the issuer s economy or financial systems, etc. The resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if and when the change is large. B) Fiscal Base The credit rating is subject to alteration if the issuer increases/ decreases its fiscal deficit/ surplus and its public debt and thereby makes given debt payment liability less/ more bearable. The resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if and when the change is large. C) External Positions The credit rating is subject to alteration if there is a change in the issuer s international balance of payments and international investment position and thereby an improvement/ deterioration of its liquidity positions. The resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if and when the change is large. D) Social and Political Bases and Economic Policy The credit rating is subject to alteration if there is a change in the issuer s social and political conditions or economic/ monetary policies, etc. and thereby an improvement/ deterioration of its 3 / 5

6 economy and fiscal positions. The resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if and when the change is large. E) Related Parties Stance of Support/ Assistance for the Issuer The credit rating is subject to alteration if there is a change in the credit enhancement provider or other related parties with regard to their stance of support/ assistance for the issuing government and thereby an improvement/ deterioration of its economy, fiscal positions and liquidity positions. The resultant alteration of the credit rating is usually a notch, with possibility of a few notches if and when the change is large. F) Order of Seniority in Debt Payment The credit rating is subject to alteration if there is a change in the rated debt s status in the order of seniority relative to other debts, due to improvement/ deterioration of the issuer s fiscal condition and/or will. The resultant alteration of the credit rating is usually a notch, with possibility of a few notches if and when the change is large. G) International Economies The credit rating is subject to alteration if there is a change in the international economies, commodity or foreign exchange markets, etc. and thereby, through international balance of payments, an improvement/ deterioration in the issuer s fiscal balance or debt payment capacity. The resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if and when the change is exceptionally large. H) Various Events The credit rating is subject to alteration on occurrence of various events, such as domestic unrest, war, natural disaster, etc. which are unforeseeable at the time when the credit rating is determined, causing a significant change on the issuer s economy, fiscal positions, etc. The resultant alteration of the credit rating could be by a notch but more often than not as much as a few notches. 12 Information on the Content of the Credit Rating, Including the Historical Performance of the Credit Rating and the Expected Probability of Default and the Expected Loss in the Event of Default as Required by Paragraph (a)(1)(ii)(l) of Rule 17g-7 The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood of given debt payment and hence not necessarily a perfect representation of such likelihood. The credit rating is not intended to estimate the probability of default or the loss on given default, either. Facts of the probability of default are posted as Form NRSRO Exhibit 1 on the JCR website under the URL: 13 Information on the Sensitivity of the Credit Rating to Assumptions Made as Required by Paragraph (a)(1)(ii)(m) of Rule 17g-7 A) Economic Base The credit rating herewith presented could be changed if and when the assumptions made at the time of its determination turn out to be inaccurate with regard to the issuer s economy or financial systems, etc. The resultant change of the credit rating is most likely by a notch, as JCR speculates, but possibly as much as a few notches if the development is rapid in improvement or deterioration of the issuer s economy or financial systems on some drastic change in environments, etc. B) Fiscal Base The credit rating herewith presented could be changed if and when the assumptions made at the time of its determination turn out to be inaccurate with regard to the issuer s fiscal conditions in terms of annual balance or public debt. The resultant change of the credit rating is most likely by a notch, as JCR speculates, but possibly as much as a few notches if the development is rapid in improvement or deterioration of the issuer s fiscal condition on some drastic change in its economy. 4 / 5

7 C) External Positions The credit rating herewith presented could be changed if and when the assumptions made at the time of its determination turn out to be inaccurate with regard to the issuer s liquidity positions reflecting improvement or deterioration of the international balance of payments and the international investment position. The resultant change of the credit rating is most likely by a notch, as JCR speculates, but possibly as much as a few notches if the development is rapid in improvement or deterioration of the issuer s liquidity positions on some drastic change in the country s economic/ fiscal conditions and financing activities, etc. D) Social and Political Bases and Economic Policies The credit rating herewith presented could be changed if and when the assumptions made at the time of its determination turn out to be inaccurate with regard to the issuer s social and political bases and economic/ monetary policies. The resultant change of the credit rating is most likely by a notch, as JCR speculates, but possibly as much as a few notches if the country s situation changes drastically, making the issuer s social and political bases and economic/monetary policies significantly improved or deteriorated. E) International Economics The credit rating herewith presented could be changed if and when the assumptions made at the time of its determination turn out to be inaccurate with regard to the prospects of the international economies or commodity/ foreign exchange markets, etc. JCR expects the change should be most likely by a notch but could be as much as a few notches, should the economy or the markets change so greatly. 14 Information on the Representations, Warranties, and Enforcement Mechanisms of an Assetbacked Security as Required by Paragraph (a)(1)(ii)(n) of rule 17g-7 The credit rating herewith presented is not for an ABS product, and hence no relevant issue. Japan Credit Rating Agency, Ltd. Jiji Press Building, Ginza, Chuo-ku, Tokyo , Japan Tel , Fax / 5

8 Attachment Attestation Required by Paragraph (a)(1)(iii) of Rule 17g-7 I, Atsushi Masuda, have responsibility to this Rating Action and to the best of my knowledge: A) No part of the credit rating was influenced by any other business activities. B) The credit rating was based solely upon the merits of the obligor, security, or money market instrument being rated. C) The credit rating was an independent evaluation of the credit risk of the obligor, security, or money market instrument. Atsushi Masuda General Manager of International Rating Department Japan Credit Rating Agency, Ltd. Jiji Press Building, Ginza, Chuo-ku, Tokyo , Japan Tel , Fax